A v. B

At a glance

Parties

A v. B (parties anonymised)

Case no.

CL-2019-000632; [2020] EWHC 952 (Comm)

Court

High Court of Justice, Queen's Bench Division, Commercial Court (Moulder J)

Underlying award(s)

Consent award of 4 December 2018 (London-seated arbitration)

Outcome

The order of 17 October 2019 granting leave to enforce was set aside. The section 66 application was not dismissed: the factual disputes go to a further hearing.

Amount

Award: USD 34,632,475.62 principal plus accrued interest of USD 10,229,128.56. The set-aside order had required payment of USD 39,111,604.18.

The dispute

A and B settled an earlier arbitration about a 2015 settlement agreement through a 2018 Settlement Agreement. The arbitrator then recorded it in a consent award. The award required B to pay USD 34.6 million in quarterly instalments of USD 1.25 million. If B missed an instalment, the full principal and accrued interest became due immediately (clause 3.3). B paid the 1 October 2019 instalment late, on 16/17 October 2019. A then obtained an order on the papers from Teare J under sections 101(2) and 66(1) of the Arbitration Act 1996 to enforce the accelerated sum. B applied to set the order aside on three grounds: the award was made in the United Kingdom and so is not a New York Convention award; section 66 does not allow enforcement of a sum the award did not establish; and A had orally agreed on 4 October 2019 not to enforce, or was estopped from doing so. B also argued that A had given late payment instructions under clause 2.3.

Key holdings

1. The October Order must be set aside. The award was made in London, so it is not a New York Convention award under section 100. On an ex parte application on the papers, the applicant must draw all relevant points to the judge's attention. The claim form relied on section 101, so the judge may have been led into making the order. ¶¶ 22–26
2. Section 66 could not support an order to pay the accelerated sum of USD 39,111,604.18. The award provides only that the sum becomes due if certain conditions are met. It does not establish the 'right to payment' of the accelerated amount. Whether clause 3.3 had been triggered needs a further adjudication, which the arbitrator never made. ¶¶ 27–34
3. Section 66 is a summary procedure. The court has a discretion, and it may decide disputed facts within the section 66 application itself (following Sovarex). The arbitrator is functus officio, and A does not rely on the 2018 Settlement Agreement, so there is no need for a new arbitration. ¶¶ 37–38
4. B showed a realistic prospect of defeating enforcement. The 'no oral variation' clauses do not settle at this stage whether there was an oral agreement. The consideration said to have been given, including alternative security, needs fuller investigation in light of Foakes v Beer. The solicitors' letter of 8 October 2019 only reserved A's rights, so the estoppel defence is not fanciful. The meaning of clause 2.3 on payment instructions needs full argument. ¶¶ 41–43
5. The factual dispute is to be decided at a further hearing of the section 66 application. The parties were invited to agree directions. ¶ 44
6. The judgment was made public because its point on section 66 may guide practitioners. The parties are named only by initials to protect the confidentiality of the arbitration (following City of Moscow v Bankers Trust). ¶ 2

Procedural history

1. 4 December 2018The arbitrator issues a consent award recording the 2018 Settlement Agreement.
2. 1 October 2019The quarterly instalment of USD 1.25 million falls due and is not paid on that date.
3. 4 and 11 October 2019The parties meet. B says A orally agreed not to enforce the award; A disputes this.
4. 8 October 2019A's solicitors notify B of the breach and state that the full amount is due under clause 3.3.
5. 14 October 2019A files a claim form seeking leave to enforce the award.
6. 17 October 2019Teare J grants leave to enforce on the papers under sections 101(2) and 66(1). The October instalment is paid on 16/17 October 2019.
7. 7 November 2019B applies to set aside the October Order.
8. 31 March 2020The set-aside application is heard remotely and in private.
9. 22 April 2020Judgment: the October Order is set aside and the section 66 application goes to a further hearing.

Tribunal, counsel and experts

For the claimant

Joseph Hage Aaronson LLP

For the respondent

Carter-Ruck Solicitors

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Keywords

• section 66 Arbitration Act 1996
• section 101
• New York Convention award
• enforcement
• set-aside of enforcement order
• consent award
• agreed award
• acceleration clause
• instalment payments
• oral variation
• estoppel
• Foakes v Beer
• West Tankers
• Sovarex
• ex parte application
• confidentiality
• anonymised judgment

Summary generated with AI from the published documents — refer to the award for the authoritative text.